Answer to Question #302502 in Microeconomics for Aliot

Question

What happens to the equilibrium position if following incidents are occurred?

i. If consumer income increases.

ii. Number of buyers in the market decreases

Answer 1

• When consumer income increases, the demand for goods and services increases from D to D1. This leads to the shift of the equilibrium from original point Q to a new point Q1.

• When the number of buyers in the market decreases, the demand for products will reduce from D1 to D2. As a result, the equilibrium will shift from Q1 to Q2.